Oracle 2007 Annual Report Download - page 59

Table of Contents
so that the interest payable on the senior notes effectively became fixed at a rate of 4.62% and 4.59%, respectively,
until maturity.
The Senior Notes rank pari passu with any Commercial Paper Notes (defined below) that we may issue and all
existing and future senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of
Oracle Corporation will be effectively senior to the Senior Notes and any Commercial Paper Notes that we may
issue.
Commercial Paper Program
In March 2008, we increased our commercial paper program to $5.0 billion from $3.0 billion (the CP Program). The
original dealer agreements entered into in February 2006 with each of Banc of America Securities LLC, JP Morgan
Securities Inc., Lehman Brothers Inc., Merrill Lynch Money Markets Inc. and Merrill Lynch Pierce, Fenner & Smith
Incorporated and the Issuing and Paying Agency Agreement entered into in February 2006 with JPMorgan Chase
Bank, National Association, remained in effect and were not changed. Under the CP Program, we may issue and sell
unsecured short-term promissory notes (Commercial Paper Notes) pursuant to a private placement exemption from
the registration requirements under federal and state securities laws. In fiscal 2008 and 2007, we issued
approximately $1.2 billion and $2.1 billion of Commercial Paper Notes, respectively, of which none and $1.4 billion
remained outstanding as of May 31, 2008 and 2007, respectively. As of May 31, 2008, we had $5.0 billion of
capacity remaining under our CP Program.
Revolving Credit Agreements
In March 2008, we entered into a $2.0 billion, 364-Day Revolving Credit Agreement with Wachovia Bank, National
Association, Bank of America, N.A. and certain other lenders (2008 Credit Agreement). The 2008 Credit Agreement
was in addition to an existing $3.0 billion, five-year Revolving Credit Agreement with substantially the same parties
that we entered into in March 2006 (the 2006 Credit Agreement and, collectively with the 2008 Credit Agreement,
the Credit Agreements). The Credit Agreements provide for unsecured revolving credit facilities, which can also be
used to backstop any Commercial Paper Notes (see above) that we may issue and for working capital and other
general corporate purposes. Subject to certain conditions stated in the Credit Agreements, we may borrow, prepay
and re-borrow amounts under the facilities at any time during the terms of the Credit Agreements. Interest for the
Credit Agreements is based on either (a) a LIBOR-based formula or (b) a formula based on Wachovia’s prime rate or
on the federal funds effective rate. Any amounts drawn pursuant to the 2008 Credit Agreement are due on March 17,
2009 (we may, upon the agreement of the lenders, extend the facility by up to two times in succession). Any amounts
drawn pursuant to the 2006 Credit Agreement are due on March 14, 2011. No amounts were outstanding pursuant to
the Credit Agreements as of May 31, 2008 and 2007. A total of $5.0 billion remained available pursuant to the Credit
Agreements at May 31, 2008.
The Credit Agreements contain certain customary representations and warranties, covenants and events of default,
including the requirement that our total net debt to total capitalization ratio not exceed 45%. If any of the events of
default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the Credit
Agreements may be declared immediately due and payable and the Credit Agreements may be terminated. We were
in compliance with the Credit Agreements’ covenants as of May 31, 2008.
Selected Quarterly Financial Data
Quarterly revenues and expenses have historically been affected by a variety of seasonal factors, including sales
compensation plans. In addition, our European operations generally provide lower revenues in our first fiscal quarter
because of the reduced economic activity in Europe during the summer. These seasonal factors are common in the
software industry. These factors have caused a decrease in our first quarter revenues as compared to revenues in the
immediately preceding fourth quarter, which historically has been our highest revenue quarter. We expect this trend
to continue into the first quarter of fiscal 2009.
The following tables set forth selected unaudited quarterly information for our last eight fiscal quarters. We believe
that all necessary adjustments, which consisted only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the results of such periods when read in conjunction with the consolidated
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Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠